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Bridgestone Firestone Maxiprest Limited - Year-End Results - December 2002
Bridgestone Firestone Maxiprest Limited
(Incorporated in the Republic of South Africa)
Registration Number : 1988/006456/06
Share Code: BDS
ISIN Code: ZAE000027447
- THE COMPANY
Bridgestone Firestone Maxiprest Limited, listed on the JSE Securities Exchange
under `Cyclical Consumer Goods - Automobiles and Parts` Sector, is sub-Saharan
Africa`s predominant retreader, multi-brand new tyre distributor and tyre
management service provider. Its activities in the region are conducted through
25 retread plants and 116 retail and service outlets, also providing support for
its 24-hour transporter tyre breakdown service.
In SA, operations are conducted through wholly - and majority-owned
subsidiaries; Maxiprest Tyres (passenger, truck, bus and agriculture), Quality
Tyres (mining and earthmover), and Maxiprest Africa Operations, formerly
Pentamax (regional development and distribution). In the balance of sub-Saharan
Africa, operations exist in Botswana, Mozambique, Namibia, Swaziland, Zambia and
Zimbabwe. All operating entities in these areas are also classified as approved
Bridgestone Firestone agents.
Bridgestone Corporation (Japan), the world`s leading new tyre and rubber
manufacturer, holds a strategic 53% stake in the Group through its local
subsidiary Bridgestone Firestone SA Holdings (Pty) Ltd. Management, institutions
and the investing public hold the balance of the equity.
- OPERATIONAL PERFORMANCE
In summary, for the year ended December 2002, the Group achieved a 24% increase
in turnover at R1 376 million (2001: R1 108 million). Headline earnings
decreased to R25 million (2001: R51 million) - while, at R24 million (2001: R49
million) attributable earnings reflect a decrease of 51%.
The results have been impacted by charges approximating R27 million, relating
to, inter alia, the strengthening of the Rand, the economic and political
position in Zimbabwe and the provisions made for losses incurred by our
associate company Roadgrip Afrityre Holdings (Pty) Ltd (RGA).
The appreciation of the Rand at the end of 2002 necessitated a revision of the
value of mainly US dollar based receivables from foreign operations which
required a write-down of R5,4 million (2001: R7,7 million profit).
The Zimbabwe operation, which became a wholly owned subsidiary effective from 1
January 2002 (2001: 56,7% owned), has not been consolidated due to current
uncertainty surrounding the political and economic situation in the country, as
well as the anticipated restrictions on remitability of funds. The carrying
value of the Zimbabwe investment was reduced from R15,5 million at 31 December
2001 to R9,6 million as a result of a capital reduction scheme. It is, however,
considered prudent to make a provision of R4,1 million (2001: Nil) against the
investment to bring the carrying value in line with the hyperinflationary
adjusted net asset value of R5,5 million (2001: R11,3 million restated). The non
consolidated hyper-inflationary loss of the Zimbabwe operation amounted to R4,1
million (2001: R8,5 million profit as restated). Dividends received by the group
from Zimbabwe in 2002 amounted to R3,3 million (2001: R1,7 million).
The Group`s associate company, RGA, and its subsidiary companies, in which the
Group has a 40% holding, showed an accumulated loss at the end of the year of
R13 million (2001: R1,3 million). The Group is the major supplier to RGA and has
supported it financially by way of extended trade finance and subordination of
its loan account. The Group has accounted for the losses in the associate by
charging R6,1 million (2001: R0,6 million) against earnings as a "share of
associate losses" being R4,7 million (2001: R0,6 million) relating to the share
of trading losses and a provision of R1,4 million (2001: Nil) for the impairment
of its investment in RGA. A further provision of R7,8 million (2001: Nil) was
raised against the possible non-recovery of receivables. Maxiprest has assisted
with considerable resources which are designed to supplement the management of
current contracts and effect cost reductions. These steps, together with the
successful conclusion of current tenders should ensure that this associate will
not incur losses in the current year.
The property division, managing buildings solely for use by the Group`s
manufacturing, wholesale and retail operations, has a carrying value of R69,3
million (2001: R64,2 million). In terms of capital gains tax requirements, the
properties were valued during the year, and although, individually, certain
properties showed impairments, the overall portfolio valuation exceeded its
carrying value. The board has considered the valuation, and is of the opinion
that no permanent impairment exists and consequently considers the carrying
value to be fair.
Headline earnings have been further impacted by an increased tax charge at an
effective rate of 39,8% (2001: 30,2%). The increased charge has arisen due to
assessed losses in the Group having been fully utilised in 2001, the impact of
the share of associated losses and non-tax deductible charges to the income
statement amounting to R4,4 million (2001: R4,5 million).
- DIVIDEND
The dividend policy of the company is three times cover. As such, the board
deems it justified to pay a final dividend of 5 cents per share, bringing the
total dividend for 2002 to 10c per share.
- COMMENTARY AND OUTLOOK
Management focus remains the ongoing refinement and enhancement of tyre
management services to transporters and mining operators, and the strategic
expansion of the distribution of new and retread tyres in sub-Saharan Africa.
To this end, both the Group`s retail, service and retread manufacturing
footprints have been substantially augmented. In South Africa, branches now
total 93 (2001: 87) and factories, 18 (2001: 16). This expansion is in line with
the requirements necessary to support our on-site tyre management facilities and
the 24-hour transporter tyre breakdown service, as well as the expansion of our
newly introduced specialist agricultural tyre division.
In the balance of sub-Saharan Africa, 51% of Quality Tyres Namibia (Pty) Ltd has
been acquired, supplying new and retread brands and services through a network
of 8 outlets and 1 factory - supported by a new wholly-owned distribution
warehouse in Windhoek.
The agreement concluded by Pentamax SA (Pty) Ltd (now known as Maxiprest Africa
Operations to more clearly define its activity) with the Entreposto Group in
Mozambique for a 60% stake in a distribution warehouse and retail operation in
Maputo, will be expanded to include operations in the northern agricultural
areas during 2003. Management is optimistic that the Mozambican operation will
benefit from the momentum of the reconstruction currently underway in that
country.
In Zambia, Maxiprest Tyres and Quality Tyres outlets, supporting the mining
operations in the Kitwe area, are fully on stream.
The demand for truck, bus and mining tyres in Zimbabwe remains strong, but the
instability of the economic and political situation is of concern. Management is
closely monitoring the situation and the business will be refocused when
necessary.
The corporate identity re-imaging for the Group is now in place, ensuring
greater visibility for the brand as a whole. This will continue to improve as
strategic acquisitions or agreements enlarge the service network across sub-
Saharan Africa.
The new year will also see the launch of an entirely new range of Bridgestone
Retread Tread Designs to suit local highway, dual-purpose and drive axle
positions, complemented by the Maxiprest Compressed Tread Retreading Process.
Substantial investment in a centralised processing and information system will
add considerable value from both a service and reporting point of view, and
should provide the Group with improved distribution co-ordination and management
information.
New plant and equipment for the manufacture of earthmover retread tyres was
installed during 2002. The appearance and performance of the retread product is
superior to any currently available on the market. This will further entrench
the Group`s position as sub-Saharan Africa`s predominant retreader and tyre
management service provider.
- CORPORATE GOVERNANCE
In compliance with good corporate governance the Group has appointed two
independent non-executive directors, Messrs N.O. Davies and R.S. Hislop, who are
members of the remuneration and audit committees and chair them respectively.
In November the Board was reconstituted in terms of which the following changes
were made: C.E. Brown - managing director, M.E. Davison - finance director, P.
Constantinidis - director - domestic retail sales. S. Wustman of Bridgestone
Firestone SA Holdings (Pty) Ltd was appointed a non-executive director.
G.M. Sinclair and H.J. Wessels resigned from the Board, but remain as senior
executives of the company, responsible for Group Finance and OTR divisions
respectively. G.M. Sinclair retains the portfolio of company secretary.
- ON BEHALF OF THE BOARD - 3 March 2003
C. E. BROWN M.E. DAVISON
Managing Director Finance Director
- DIVIDEND DECLARATION
Notice is hereby given that a final dividend for the year ended 31 December 2002
(Dividend number 11) of 5 cents per share has been declared to shareholders
recorded in the books of the company at the close of business on 11 April 2003.
Shareholders are advised that the last day to trade cum dividend will be 4 April
2003. Shares will trade ex-div as of 7 April 2003. Record date will be 11 April
2003 and the payment date 14 April 2003. Share certificates may not be
dematerialised or rematerialised between Monday 7 April 2003 and Friday 11 April
2003, both days inclusive.
- ON BEHALF OF THE BOARD - 5 March 2003
G.M. SINCLAIR CA(S.A.)
Company Secretary
BALANCE SHEET
at 31 December 2002
Audited Audited
Dec 2002 Dec 2001
R `000 R `000
ASSETS
Non-current assets
Property, plant and equipment 114 206 110 431
Goodwill 7 072 6 817
Deferred tax 2 621 -
Investment in associate 13 363 7 112
Unconsolidated subsidiary 5 536 21 714
Share incentive scheme 5 625 9 414
148 423 155 488
Current assets
Inventory 143 269 129 668
Accounts receivable 305 272 230 816
Bank balances and cash 59 323 23 528
507 864 384 012
TOTAL ASSETS 656 287 539 500
EQUITIES AND LIABILITIES
Capital and reserves
Share capital and premium 130 487 130 487
Accumulated profits 152 475 152 246
Shareholders for dividend 7 910 9 492
Other reserves (1 988) -
296 794 292 225
Outside shareholder`s interest 4 436 19
Long term liabilities 137 554
Current liabilities
Accounts payable 330 431 220 776
Short term portion of long
term liabilities 395 1 199
Bank overdraft 4 506 3 095
Taxation payable 19 588 21 632
354 920 246 702
TOTAL EQUITY AND LIABILITIES 656 287 539 500
Net Asset Value per share (cents) 187.6 184.7
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2002
Audited Audited
Dec 2002 Dec 2001
R `000 R `000
Share capital and premium
Balance at beginning and end of the year 130 487 130 487
Accumulated profits
Balance at beginning of the year 152 246 120 357
Profit for the year 23 959 49 291
Distribution to shareholders (15 820) (17 402)
Balance at end of the year 160 385 152 246
Shareholders for dividend
Balance at beginning of the year 9 492 7 910
Distribution to shareholders 15 820 17 402
Paid during the year (17 402) (15 820)
Balance at end of the year 7 910 9 492
Other reserves
Balance at beginning of the year - -
Exchange differences
arising on translation
of foreign operations (5 137) -
Arising on consolidation
of previously
unconsolidated subsidiaries 3 149 -
Balance at end of the year (1 988) -
Capital and reserves 296 794 292 225
ABRIDGED CASH FLOW STATEMENT
for the year ended 31 December 2002 Audited Audited
Dec 2002 Dec 2001
R `000 R `000
Net cash flows from operating activities 61 116 11 598
Net cash flows from investing activities (24 571) (22 518)
Net cash flows from financing activities (1 607) (2 439)
Net cash generated (utilised) 34 988 (13 359)
Cash and cash equivalents at
beginning of year 20 433 33 792
Effect of foreign exchange rate changes (604) ----
Cash and cash equivalents at end of year 54 817 20 433
SEGMENTAL ANALYSIS
for the year ended 31 December 2002
Audited Audited
Dec 2002 Dec 2001
R `000 R `000
Revenue
External sales
Wholesale and retail 1 313 980 1 064 739
Tyre leasing 41 749 36 673
Manufacturing 20 010 6 705
Inter-segment sales
Wholesale and retail 501 763 293 239
Manufacturing 229 562 194 459
Property 9 548 9 909
Inter-group elimination (740 873) (497 607)
Revenue 1 375 739 1 108 117
Segmental result
Wholesale and retail 40 174 39 989
Tyre leasing 2 341 13 601
Manufacturing 24 287 17 777
Property 6 234 2 732
Provision for losses in associate (7 771) -
Provision for impairment
in unconsolidated subsidiary (4 102) -
Un-allocated corporate (expenses) income (840) 1 651
Inter-group elimination (10 760) (4 569)
Profit before tax and associate losses 49 563 71 181
Income tax expense (17 292) (21 290)
Share of associate losses (income) (6 111) (581)
Outside shareholder`s interest (2 201) (19)
Profit for the year 23 959 49 291
INCOME STATEMENT
for the year ended 31 December 2002
Audited Audited
Dec 2002 Dec 2001
R `000 R `000
Revenue 1 375 739 1 108 117
Cost of sales (990 747) (788 465)
Gross Profit 384 992 319 652
Provision for losses in associate (7 771) -
Provision for impairment in
unconsolidated subsidiary (4 102) -
Operating expenses (323 161) (249 493)
Profit from operations 49 958 70 159
Net finance cost (3 661) (629)
Share of associate losses and
impairment of investment (6 111) (581)
Income from investments 3 266 1 651
Profit before tax 43 452 70 600
Income tax expense (17 292) (21 290)
Profit after tax 26 160 49 310
Outside shareholder`s interest (2 201) (19)
Profit for the year 23 959 49 291
Shares in issue (million) 158.2 158.2
Earnings per share (cents) 15.1 31.2
Headline earnings (R`000)
Profit for the period 23 959 49 291
Exceptional items after tax 955 1 400
24 914 50 691
Headline earnings per share (cents) 15.7 32.0
Dividend per share 10.0 11.0
Capital expenditure (R`000)
- incurred 38 546 26 105
- approved 25 259 12 511
Depreciation (R`000) 15 048 14 292
Accounting policies: The financial statements have been prepared in accordance
with South African Statements of Generally Accepted Accounting Practice. Audited
results: The results for the year ended 31 December 2002 have been audited by
Deloitte & Touche. Their unqualified audit opinion is available for inspection
at the registered office of the company.
Directors - Executive: K Yamamoto (Chairman)(Japanese) C E Brown (Managing) R D
Boulanger P Constantinidis (Greek) M E Davison
Non Executive: R J Barlow S Hashimoto (Japanese) D H Rabin T Wada (Japanese)
S Wustmann
Independent Non Executive: N O Davies R S Hislop
Company Secretary: G M Sinclair CA (SA)
Registered Office: 65 Chadwick Avenue Wynberg 2090 (PO Box 543 Bergvlei 2012)
Auditors: Deloitte & Touche Private Bag X6 Gallo Manor 2052
Transfer Secretaries: Computershare Investor Services Limited PO Box 1053
Johannesburg 2000
Date: 05/03/2003 10:46:00 AM Supplied by www.sharenet.co.za
